Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

Binod Kumar Kasera Versus Nandlall and Sons Tea Industries P. Ltd. and Ors.

2009 (5) TMI 969 - COMPANY LAW BOARD, NEW DELHI

Dated:- 6-5-2009 - Hon'ble Judges:Vimla Yadav, Member ORDER Vimla Yadav, Member 1. In this order I am considering Company Petitions Nos. 32 of 1999 and 31 of 2003. Company Petition No. 32 of 1999 was filed by Late Shri Bholaram Kasera (the petitioner) against M/s. Nandlall and Sons Tea Industries P. Ltd. and others (respondent No. 1-company and other respondents) under Sections 235(2) read with Sections 236 and 237 of the Companies Act, 1956 (hereinafter referred to as "the Act") s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

inciples so that there is no mismanagement and diversion of funds; (b) an independent chairman of the company be appointed; (c) the respondents be directed that they shall not take any action in regard to the disposal of any of the fixed and liquid assets of the company till the decision made in these proceedings; (d) the appointment of an independent company secretary be ordered to maintain the minute books and other statutory books of the company; (e) the appointment and investigation by a spe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d which is presently under tea cultivation; (h) in case respondents Nos. 2 to 4 are not willing to buy the shares of the petitioner order be made providing for the purchase of the shares of the petitioner at the same rate by respondent No. 1 company with consequent reduction in share capital; (i) in case both respondent No. 1 company and respondents Nos. 2 to 4 are not willing to buy the shares of the petitioner, order be made for the purchase of the shares of respondents Nos. 2 to 4 by the peti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o continue the partnership business, including all its assets, now being carried on under the name and style of Nandlall and Sons to cultivate tea, coffee, cocoa, citronella grass, other trees and general plantation and to carry on business of planters, growers, manufacturers, buyers and sellers, exports, importers stockists, brokers, agents, sub-agents, distributors of tea, tea seeds, coffee, cocoa, citronella grass, tea seeds and to manufacture and deal in tea-chest fittings and other componen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of respondent No. 1. 3. Counsel for the petitioner contended that late Shri Bholaram Kasera was the son-in-law of Shri Nandlall Agarwalla (now deceased) and was partner of the firm M/s. Chunnilall Pannalall & Go. (CLPL). M/s. CLPL after convincing the idea of purchasing Hukanpukhri Tea Estate and making negotiations in this regard had nominated Shri Nandlall Agarwalla to purchase this tea estate which belonged to M/s. Jokai (Assam) Tea Co. Ltd. 0TC) which had an area of 2,489 acres. Shri Nan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o. 2 were promoters. It was pointed out that in absolute disregard of this understanding Shri Nandlall purchased the estate in the name of his firm, which was floated specifically for this purpose. Upon coming to know of Shri Nandlall's intention the petitioner's father vehemently protested. Shri Nandlall then gave an assurance that he would transfer his firm to a joint stock company and M/s. Nandlall & Sons Tea Industries P. Ltd., was formed on June 15, 1976, by taking over the busi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

when several family members pressurised Nandlall to either refund ₹ 9 lakhs or allot shares, he did allot 40,000 shares of ₹ 10 lakhs which constituted 25 per cent, of the paid-up capital thereby making the petitioner's father the single largest shareholder of the company, and the balance of ₹ 5 lakhs which was due to the petitioner's father was returned by Nandlall only when the petitioner's father obtained a decree from the Calcutta High Court on August 16,1999, i .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nders were also sent. It was pointed out that all the efforts of petitioner's father to revive the company went in vain and the company turned a deaf ear to his queries and requests in spite of him being the single largest shareholder. The petitioner's father gave a power of attorney dated June 11, 1986, in favour of the petitioner. The petitioner came to know that there was misappropriation of ₹ 15,13,712.61 being profit made by JTC for the year 1974 by respondent. No mention of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eholder the petitioner's father was never allowed to participate in the management and his rights as a shareholder were at all time denied so that Shri Nandlall and his sons could at all times misappropriate and siphon of funds from the company. Drawing my attention to the discrepancies in the balance-sheets it was contended that (i) there is a vast un-ignorable discrepancy between actual sales and sales as per the balance-sheets and profit and loss account for the years 1977 to June 1985 an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e of the sales spent on maintenance and upkeep were shown; (vi) comparison with manufacturing expenses and turnovers of some other companies were made; (vii) without having or showing any investment in shares in the previous year in the year 1991-92, the balance-sheets show an amount of ₹ 1,79,710 towards "income from other source" where the major sub-head is "income from sale of shares" which amounts to ₹ 1,12,40; (viii) in the year 1992-93 accumulated losses of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

regard in terms of Schedule VI of the Companies Act, 1956) in the balance-sheets for this year under the head "income from other source" amounting to ₹ 1,79,710 major sub-head is "income from sale of shares" amounting to ₹ 1,12,490; in the year 1992-93, there were accumulated losses amounting to ₹ 93,90,636 and loss for the year amounted to ₹ 72,86,722 in spite of that the respondents deposited advance agricultural income-tax to the tune of ₹ 124 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mentioning the correct and true facts in the balance-sheets of the company. It was contended that the balance-sheets were considered and approved in the annual general meeting by an overwhelming majority. Since the respondent did not respond to the petitioner on the objections in the annual general meeting, therefore, such petition has been placed before the Company Law Board. It was pointed out that the petitioner has been frustrated not for getting control of the company, but for not getting .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the shareholder by the management in any of the previous years instead the management always took the shelter of bad weather and low demand of tea in the international market, deteriorating of the political condition, etc., as per the directors' report for the years 1991-92,1992-93,1993-94,1994-95, etc. The management has spent ₹ 18 lakhs for modernisation during the years 1992-93 to 1994-95. Despite the alleged investment in modernisation the production declined, losses increased, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d the transfer of their outstanding remuneration to their loan account to stop the drainage of funds, but they have suppressed the fact that despite financial difficulty and the company's incurring losses from year to year making the company to face more and more financial difficulty, they had repaid the various loans, ₹ 14,775 taken in the year 1991-92 was repaid in the year 1992-93, out of the loan amounting to ₹ 3,91,137 taken from Mr. Nirmal Kumar Agarwal in the year 1993-94, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

director's remuneration, the director's were not only withdrawing their remuneration but also interest as well as their loan. On the other hand for the petitioner not only the rate of interest of loan given by the petitioner was reduced but the repayment was also denied. Percentage of the outstanding loan given by the petitioner in spite of the reduction in the rate of interest was much higher then the aggregate loan given by all the directors during the same period. 9. M/s. Nandlall &am .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and order problem applies to the respondent then it should have applied more to these companies also. But, despite all the odds these companies have been earning very good profits. It was contended that the respondents allegation that the 25 per cent, shares allotted to the petitioner was virtually a gift under threat by late Nandlall Agawalla apprehending the possible threat to be meted to his daughter, had no other option but to agree to the share allotment in favour of the petitioner, the val .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

excise authorities. The respondents have not sold the tea waste every year. Hence there should be some stock at the end of each year. If, it is admitted that the figure now submitted by the respondents are as per form R. T-12 under central excise is correct, then it would mean that the respondents are using different figures for different purposes. The petitioner has computed the figures of turnover and average realisation on the basis of audited accounts. As regards 93 per cent, of the tea sold .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o ask for any clarification after the annual general meeting does not cease. It was pointed out that the provisions and the advance payment figures are carried forward figures and pertain to earlier years. The company has incurred losses continuously from the year 1990-91 to the year 1996-97 barring the year 1995-96 and despite incurring huge losses the company has paid advance payment of income-tax (including TDS) as well as agricultural income-tax. Details as follows: Year Loss Advance Income .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ers sales could not be effected and the goods delivered to those buyers have been shown as closing stock for want of confirmation of sale from such buyers, it was contended that the tea seasons ends by December and accounts are squared up by that time, then now the respondent can claim that up to March 31, of the next calendar year, confirmation of sales are not received unless he has mala fide intention to defer the sales to subsequent years to show the lower profitability in the accounts. 12. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

clear as to how the auditor has signed the accounts and issued the audit report on the accounts of the company for similar accounting year on two different sets having different figures. It was pointed out that unsecured loans and current liabilities have not been disclosed one set of audited balance-sheet on September 19, 1994, but has been on the other set of audited balance-sheet which was issued subsequently, in one set of audited balance-sheet this has been stated that the closing stock of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

same has been disclosed in the other set of the audited balance-sheet. The company has incurred a loss of ₹ 16.41 lakhs against the sale of ₹ 192.59 lakhs in the year 1993-94. As such, it is evident that the cost of the stock is higher than the selling price as such this should have been valued at selling price, the average selling price during the year was ₹ 52.60 per kg. the closing stock valued at ₹ 35.86 per kg. is much lower than the average selling price, the stock .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not affect the profitability but it does distort the facts which should have been disclosed to the shareholders correctly. 13. It was pointed out that during the year 1996-97 company has shown its entire production as saleable tea, whereas up to the previous year a portion of the production was always shown non-saleable and expenditure was generally booked without any obligation to pay. It was contended that entire investment for the purchase of the said tea estate was not made by late Nandlall .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

derstanding by and between the petitioner and the respondents that a joint stock company will be formed to take over the ownership and management of the tea garden. It was agreed that in the said tea company both the respondents as well as the petitioner would be directors. As a matter of fact a joint stock company in the name of M/s. Hukanpukhri Tea Co. P. Ltd., was incorporated in which the petitioner was also made a director. When it became certain that the vendor was prepared to sell the gar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

company would be formed to take over the ownership and management of the said garden. In the said company, it was also agreed that the petitioner also be associated as a director. But, he was never associated as a director in the said company. It was contended that Nandlall Agarwalla's family has fraudulently and dishonestly taken absolute control of the management of the company and causing illegal and unlawful acts. The respondents never explained to the petitioner as to how this money was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

titioner remain unanswered by the respondent, there are several correspondences made with the auditors by the petitioners showing discrepancies in the books of account, however, the auditor has not corrected the discrepancies, the company has violated the provisions of Sections 209(3), 218, 215 relating to maintenance of accounts disclosures, circulation as they have not maintained the accounts and have failed to disclose accurate information to the shareholders. The auditors are under the oblig .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ccounts were never sent to the petitioner. 16. It was contended that since the company has been running in losses for the last several years the value of shares had only been getting depreciated. The company is running under losses by the acts of mismanagement which has caused loss to the petitioner. The petitioner has filed the complaints before the Registrar of Companies, Kolkata on account of the respondents not sending the notices of the meetings to the petitioner. The respondent-company has .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t at ₹ 500 per equity share. The petitioner and his late father have been shareholders of the company since 1991 and are unable to enjoy the fruits of investment in the company, hence it was prayed that the respondents may, therefore, be directed to purchase the shares of the petitioner at the valuation of the company as on date of filing of the petition in the year 2001. Counsel for the petitioner pointed out that the contention of the respondent that the workers grievances cannot be a gr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ioner has every right to produce the same before the Company Law Board. It was pointed out that the respondents have time and again tried to cover up their misdeeds by taking shelter in the non-existing threats received from them and on account of the alleged industrial unrest. All other tea gardens in the area are not suffering the same fate as the respondent-company and, therefore, the respondent-company is suffering only on account of mismanagement. 17. Counsel for the petitioner pointed out .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er. Further, the respondents have not explained the mismanagement and fudging of the accounts by the respondent-company from the year 1999 onwards, the period for which no dividend was paid at all to the shareholders. The profit and loss accounts do not bear the true and correct picture of the accounts. It was argued that the principles of partnership apply in the present case and the respondents may be directed to purchase the shares of the petitioner. 18. Counsel for the petitioner relied on t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o-operative Wholesale Society Ltd. v. Meyer [1959] 29 Comp Cas 1 (HL), wherein it has been held that the powers of the court is unlimited under Section 210 (currently Section 397) and the court may make such orders as it thinks fit with a view to bring to an end the matters complained of including an order for buying one faction by the other. In Bennet Coleman and Co. v. Union of India [1977] 47 Comp Cas 92 (Bom), wherein it has been held that the court under Sections 397, 398 and 402 does not p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the petitioner has been totally excluded from the management and there are serious cases of oppression and mismanagement pointed out by the petitioner, it was, therefore, prayed that it is a fit case for removing the present management and investigating into the affairs of the company. 19. Shri Anil Agarwalla, counsel for the respondents taking preliminary objections argued that (a) the petition has been filed by one Binod Kasera the alleged attorney of the petitioner, he was not been authorised .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

gement of the company; (c) the petitioner has alleged that the balance-sheets of the company do not reveal the correct position of the company from the year 1991-92, the main allegation of the petitioner was that the average sales realisation were shown low or production cost was high or sundry debtors/creditors have not been properly disclosed, the petitioner, in any event, cannot raise the dispute after expiry of such long years and after the balance-sheets were considered and duly approved in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o make out any case under Section 235(2) read with Sections 236 and 237 of the said Act and/or under Section 397/398 of the Act, the said petition has been filed only to harass the respondents, almost 83 per cent, to 95 per cent, loan contribution came from the management side in the present case; (f) the condition of the factory was not good, the manufacturing of tea suffered due to intermittent breakdown and the old machines were not conducive to manufacturing quality tea, despite financial st .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the financial difficulty, the directors have allowed the transfer of outstanding remuneration to the loan account. This was done to stop the drainage of fund; (i) location of the garden is very much in the disturbed area of Assam, the management is under constant threat from within and outside, the question of mismanagement has no basis whatsoever. 20. Further, it was pointed out by counsel for the respondents that the petitioner on the other hand had never been co-operative with the management .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er, the company, with all its strains, started paying his loan on quarterly instalments beginning from August, 1998. Four instalments of ₹ 50,000 each have already been paid. It was contended that there was no any fraudulent act or any assurance given by Nandlall Agarwalla to associate the petitioner in the management after conversion of "Nandlall and Sons" to a joint sector company or that the said firm was persuaded to give a loan of ₹ 9,00,000 in the name of "Nandla .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

around 9 per cent, per annum only. 21. It was contended that the board of directors of the company did not consider his prayer for sub-division of shares as bona fide and in exercise of their power under Article 15(b) of the articles of association, the said request was rejected. My attention was drawn to a copy of the letter dated May 17, 1995, written by respondent No. 1 to the petitioner. The shares of respondent No. 1 were allotted to the petitioner and not "Bholaram Kasera, partner&quo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ust in maintaining the books of account to siphon off the resources of respondent No. 1 or that they refrained from giving necessary information in respect of opening stock or actual production or actual sale or quantity of tea manufactured or value thereof as required under Part-II of Schedule VI or that the balance-sheet or profit and loss account for the financial years ended June 1977 to June 1985, were fictitious or sham or bogus or contrary to all or any accounting principles or that the r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

alue was ₹ 2,06,62,762. The average sales realisation of tea was ₹ 30.36 per kg that about 93 per cent, of tea was sold in Guwahari public auction and the remaining tea was sold by private sale. It was pointed out that the average sales realisation in private sale was much higher than the average sales realisation in auction sale. With the fall of production and quality, sales realisation was only ₹ 30.36 per kg. The annual general meeting for the year 1992-93 was held on Septe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he same was not considered as salable tea. It was contended that there was no manipulation or maneuvering of books of the respondents or that the accounts were signed by the auditors on August 19, 1994. Along with the notice dated October 10, 1994, convening the adjourned annual general meeting on November 16, 1994, inadvertently draft (unfinished) accounts and reports for the year ended March 31, 1994, was circulated. The said mistake came to the knowledge of the company at a time when sufficie .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

kanpukhri Tea Co. P. Ltd., which was found in December 1970, with the petitioner's father, respondent No. 2 and Shri Nandlall Agarwalla as promoters of the company but contrary to the above undertaking Shri Nandlall Agarwalla had purchased the tea garden for an amount of ₹ 30 lakhs and had executed an agreement dated April 14, 1970, between his own partnership firm and M/s. Jokai (Assam) Tea Co., it was contended by counsel for the respondents that this allegation made by the petitione .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Co., and that the respondent-company out of the said ₹ 9 lakhs showed ₹ 5 lakhs as unsecured loan and shares worth ₹ 4 lakhs were allotted in the name of the petitioner's father, it was pointed out by the respondents that, in fact, it is the petitioner's father who had persuaded late Shri Nandlall Agarwalla to accept the loan of ₹ 9 lakhs from M/s. Chunnilal Pannalal & Co., so that the firm would earn highest interest, interest on the said loan was paid at 15 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

unpaid, the alleged balance of a sum of ₹ 5 lakhs was never kept with the company, late Bholaram Kasera had also deposited a sum of ₹ 3,50,000 by three cheques with the respondent-company under the cover of his letter which clearly states that the "said amount will not be withdrawn under any circumstances at any instance unless the company decides otherwise". The petitioner had also filed a winding up petition against the company for recovery of the said amount. 25. Replyi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the year 2001 without any documentary proof, whatsoever. It was argued that incurring losses by twist of circumstances cannot be termed as mismanagement and that even the best of the companies are incurring losses. The respondents drew my attention to various newspaper reports which clearly observe that the Indian Tea Industries were passing through a financial crisis and rescission and special packages have been proposed by the Union Ministry of Commerce and Industries to bail out the tea in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tical with the allegations made in C.P. No. 31 of 2003 and it was argued that the petitioner cannot seek different relief by filing separate petition on the same cause of action. My attention was also drawn to the inspection under Section 209A of the Act and it was contended that an audit team was appointed who thoroughly inspected the balance-sheets and accounts of the said company, on the basis of the observation of the inspection report of the books of account and other records of the company .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d company and there has been no further enquiry by the Registrar of Companies. 27. Further, counsel for the respondents contended that the company was not even incorporated during the period of which the petitioner is making the allegations. Furthermore, the petitioner's father became a shareholder only in 1981 admittedly and as such no grievance can be made for the period prior thereto during which the petitioner's father was not even a shareholder. It was argued that this fact itself g .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

misleading picture of the company's profitability, it was argued that the petition does not give a correct position, the figures shown in the balance-sheets includes the sale of tea waste, labour and sampling charges, etc. Furthermore, tea being an excisable commodity, the same is required to be shown in Form RT-12 return which is assessed by the Central Excise authorities and which refers to the respondents' labour and sampling charges. My attention was drawn to the figures set out in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s by registered post, the company had sent all notices by registered post to the petitioner's father. 30. It was further argued by counsel for the respondents that the respondents have not defaulted in accordance with the provisions of Sections 209(3), 209A, 218 and 215 of the Act. It was reiterated that the books of account of the company were inspected under Section 209A of the Act in the year 2001 and the inspection team did not find any irregularity in maintaining the accounts of the com .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ucted in a manner oppressive to any member or members and that an isolated act of oppression will not be sufficient to justify the relief under this section and that oppression would mean burdensome harsh and wrongful. In Smt. Anupamarani Satpal Sharma v. Anand Steel Works P. Ltd. [2006] 134 Comp Cas 285 (CLB) : [2006] 75 CLA 76, it has been held that if a petition is filed under Section 397/398 of the Act, after an inordinate delay, no relief can be given. The respondents also cited the judgmen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(CLB) : [2007] 77 CLA 70, for seeking an investigation into the affairs of the company by the Central Government in a petition under Section 237 before the Company Law Board, the petitioner has to establish beyond slightest doubt, and not for conducting roving enquiry. 32. I have considered the pleadings and the arguments of the parties in C.P. Nos. 32 of 1999 and 31 of 2003 and the case law relied upon by them. It is noted that on December 23, 1998, company petition under Section 235(2) read wi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nnalal & Co. He had negotiated with M/s. Jokai (Assam) Tea Co. Ltd., for sale of a tea garden for a sum of ₹ 30 lakhs. Shri Bholaram Kasera nominated his father-in-law Shri Nandlall Agarwalla to negotiate with Jokai (Assam) Tea Co. Ltd. However, Shri Nandlall Agarwalla executed an agreement between his own partnership firm and Jokai (Assam) Tea Co. Ltd., M/s. Nandlall & Sons Tea Industries P. Ltd., belonged to erstwhile Jokai (Assam) Tea Co. Ltd., which is also one of the best tea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

members. The partnership firm M/s. Nandlall & Sons was formed but there was an understanding by and between the petitioner and the respondents that joint stock company will be formed to take over the ownership and management of the tea garden. It was agreed that in the said tea company both the respondents as well as the petitioner would be directors. As a matter of fact a joint stock company in the name of M/s. Hukanpukhri Tea Co. P. Ltd., was incorporated in which the petitioner was also m .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

& Sons. When the petitioner objected, he was given the assurance that a new joint stock company would be formed to take over the ownership and management of the said garden. It was also agreed that the petitioner would also be associated as a director. But, he was never associated as a director in the said company. During the pendency of these petitions the parties had reported that compromise talks were in progress. However, on January 28, 2005, it was recorded that the MCA/Registrar of Com .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he case has been disposed off by the court on 18.07.2003 by imposing fine of ₹ 300/-for each director. The total fine was ₹ 900/-out of which an amount of ₹ 450/- was awarded as cost to Registrar of Companies Persons of default: (1)Shri N.K. Agarwal 209(3)(b) nsp. Dated 29.07.2002, to file prosecutions (2)Shri A.K. Agarwal (3)Shri Parshuram Agarwal 211 (treatment of stores, spare parts in the books of accounts Directorate's letter No. RD/T/2156/I nsp./2867 dated 05.08.2008, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

filed on 29.05.2008 in the court of the CMM, Kolkata, vide case No. C/14542/2008 and the case is fixed for hearing on 14.08.2008. Persons of default: (1)M/s Nandall & Sons Tea Industries Pvt. Ltd. (2)Shri N.K. Agarwal (3)Shri A.K. Agarwal (4)Shri Parshuram Agarwal (b) Inspection Report under section 209A dated 16.10.2002: Sections RD's Instructions Action taken by ROC PART'B' Directorate's letter No. RD/T/2156/Ins 58A p./481 dated 02.05.2003 referring Ministry's letter No .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

₹ 3400/-. The company has filed the revised return of deposits and the report has been sent to the Directorate on 14.12.2004. Name of the petitioners (1)Shri Parshuram Agarwal (2)Shri N.K. Agarwal (3)Shri A.K. Agarwal V. ROC, West Bengal 58A -do- Filing of Return of Deposits Directorate's letter No. RD/T/2156/Ins p./481 dated 02.05.2003 referring Ministry's letter No. I/140/2002/CL. II dated 17.03.2003, to issue show cause notice under section 628 for misstatement in the return of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

articipate in the management and his rights as a shareholder were at all time denied so that Shri Nandlall and his sons could at all times misappropriate and siphon off funds from the company. Drawing my attention to the discrepancies in the balance-sheets it has been contended that (i) there is a vast unignorable discrepancy between actual sales and sales as per the balance-sheets and profit and loss account for the years 1977 to June 1985 and 1992-93 to 1996-97; (ii) price per kg of tea as sho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he balance-sheet as on June 30, 1985, as reserves. 34. It is the petitioner's case that Nandlall Agarwalla's family has fraudulently and dishonestly taken absolute control of the management of the company and has been indulging in illegal and unlawful acts. The respondents never explained to the petitioner as to how this money was utilised in the account. The respondents have committed financial irregularities and manipulated the accounts to mislead the shareholders, exchequers, creditor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

2 under Central Excise and is correct, then it would mean that the respondents are using different figures for different purposes. The company has manipulated the expenses relating to workman welfare expenses, it is not clear as to how the auditor has signed the accounts and issued the audit report on the accounts of the company for similar accounting year on two different sets having different figures, the different figures shown in the two sets of profit and loss account and balance-sheet clea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

meeting. Notices to the annual general meetings and audited statements of accounts were never sent to the petitioner. The respondents, however, very firmly ensured that the petitioner was denied the legal and proprietary rights vested in a shareholder. The petitioner was not having any say in the activities of the company, the respondents have time and again tried to cover up their misdeeds by taking shelter in the non-existing threats received from them and on account of the alleged industrial .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the accounts by the respondent-company. The profit and loss accounts do not bear the true and correct picture of the accounts. 36. The respondents' case is that the petitioner was given umpteen numbers of opportunities to file rejoinder in the main petition (C.P. No. 31 of 2003) but the petitioner despite having taken so many opportunities and adjournments from the Company Law Board did not file any rejoinder. Because of acute disturbance in Assam most of the tea estates based in Assam we .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct money wrongfully. The tea estate is comprising of a total area of 919 hectares but a portion of the said estate is used for ancillary purposes and fallow land and only an area of 486.50 hectares are used for plantation of tea. Assam was disturbed due to various reasons, including terrorist activities, and due to such terrorism the management had to control its business in such a manner that the respondent-company was even unable to make any profit from the tea business. In spite of difficulti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

wages had been paid except for one quarter of 2003 which was under dispute. The respondents were compelled to file the writ petition in the Hon'ble High Court of Gauhati because of wrongful acts of the labour, workmen as well as the statutory authorities. Upon filing of the said writ petition the Hon'ble High Court was pleased to admit the same and grant relief to the respondent-company. 37. The respondents' case is that the condition of the factory was not good, manufacturing of tea .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has spent ₹ 18 lakhs for modernisation during the years 1992-93 to 1994-95. Despite the alleged investment in modernisation the production declined, losses increased, cost of the labour also increased, company was passing through financial stringency. Almost 83 per cent, to 95 per cent, loan, which was mostly taken from the shareholders, relatives and sister concerns are contribution from management side. 38. The respondent's case is that no case is made out requiring investigation un .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vestigation of the affairs of a company and for sundry matters related to such investigations. They follow the scheme of Sections 164 to 175 of the English Act of 1948. Section 235 enables the Central Government to appoint inspectors for investigation and report generally if the Registrar reports under Section 234 and also if a stated number of shareholders or shareholders possessing a stated voting power apply. The scheme of these Sections is that the investigation begins broadly with a view to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Act. When members apply they must support their application by evidence and give security for costs of investigations for the purpose of showing that the applicants have good reason for requiring the investigation. The purpose of Section 235(2) of the Act is not to order an investigation into the economic working of the company unless there is material to show that the fall in profits was due to illegal acts, unless it could be shown that the money had been misappropriated or that there had be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t or unlawful purpose which would lead to the conclusion that an investigation is necessary. There also must be circumstances before the court, which lead to an inference that there has been the type of malpractices by the respondent-company or its directors, which would justify an investigation of its affairs. No jurisdiction, outside the section which empowers the initiation of investigation, can be exercised. An action, not based on circumstances suggesting an inference of the enumerated kind .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erence unless the existence of the circumstances is made out. The conclusions must relate to an intent to defraud, a fraudulent or unlawful purpose, fraud or misconduct or the withholding of information of a particular kind. In the present case, there is no hint even in this affidavit that the circumstances were such as to suggest fraud, intent to defraud or misconduct, this is to say circumstances under which investigation can be ordered. A court can act only on the materials placed before it; .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

land has always been understood as a statutory exception to the rule in Foss v. Harbottle [1843] 2 Hare 461, that the internal affairs of a company is a matter for the majority, and a dissatisfied minority cannot seek outside interference. The Companies Act provides for the protection of minorities in three ways : (i) by giving them a right to complain against oppression, (ii) by permitting them to act on behalf of the company when it is wound up, as in the case of misfeasance proceedings, and ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d by limitation is not correct. It is true that some of the alleged cause of action, arose in 1976, for the financial years ending 1977 to June 1985 or 1992 to 1996-97 but this petition has been filed in the year 1999 which includes recent allegations pertaining to the year 1996-97 which have been complained in 1999 itself and the circumstances had been such that even the Registrar of Companies was given liberty to proceed under Section 209A of the Act, and the Registrar of Companies did carry o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ter they have fallen out against each other, when the purpose is only to make a score against the other. Seeking an order to investigate into the affairs of the respondent-company for such aggrievement of the petitioner is beyond the scope of Section 235(2) of the Act. Under this section directing an investigation is only analogous to the issue of a fact finding commission by a civil court for looking into the accounts or making an investigation and does not amount to a judgment within Clause 15 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reholders had been caused surreptitiously. Such investigation should not be taken lightly. Unless proper grounds exist for investigation of the affairs of the company investigation cannot be ordered. 43. In the circumstances of this case I come to the view that allegations made in the petitions are insufficient to maintain C.P. No. 32 of 1999, no case has been made out under Section 235(2) read with Sections 236 and 237 of the Act. However, in this matter the Registrar of Companies has already c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

o case of oppression or mismanagement has been made out in C.P. No. 31 of 2003, the petitioner has despite given repeated opportunities has not even filed rejoinder to the counter affidavit to the company petition. It is also true that some of the acts complained of pertain even to the period before the incorporation of respondent No. 1 company in 1976. 46. Though the petitioner has failed to make out a case of oppression and/or mismanagement in C.P. No. 31 of 2003 yet it is noted that this peti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version